This is the latest version for the need to adopt a cash life-line solution for the Greek bailout programme, after a prolonged 2nd review process and the inherent difficulty of the actors (lenders’ representing bodies) – the EC and the IMF – to agree on their macro-economic estimates regarding the economic recovery and growth in Greece and on the relevant “Mid-term Economic Plan”. Here you find the coverage from the FT correspondent, on May 23, 2017.

It is becoming a joke, a never ending anticipation for the soon to be coming final negotiation round, in order to reach the so-called staff-level agreement and catch up with the following Eurogroup meeting. This is happening since last April 2016, always ever closing the ending of the 2nd evaluation round of the Greek bailout programme!

It turns to be something which whenever will be reached, nobody will understand the “difference”, especially in terms of a climate change in the economy. Simply because the next evaluation round will be starting right after this one, having to meet all the pending matters – usually the reforms with the public sector -, which have few weeks earlier been agreed with the institutions in order to be “transferred” to the next round, i.e. kicking the can further down the road. It is indeed like waiting for the never shown up Godot – Samuel Becket perfectly gave the anticipation context in this play.

And while waiting, it seems that the working hypotheses whereas all financial calculations are being agreed upon, need to change, again. Because as expected – today’ s IMF WEO is shedding more light upon – the anticipated growth rate for 2017, as in the current negotiations, is not going to be met, lagging in the order of magnitude of 0.7% of GDP (an anticipated decrease of the 2017 primary surplus of € 1-1.5bn…)

I know the counter-argument to this. It goes that the government has already from 2016 summed up a primary surplus of some € 6.5-7bn, so there is a lot of public finance leeway there. But, keep in mind that more than half of this over-surplus had to be forwarded to the private sector (economy, being public sector’ s payments due) and that nobody can be sure that the social insurance contributions during this year (2017) will meet the expectations and close the balance – contrary to that there is strong evidence that they will not!

Are we waiting in vain? Well it seems so, until at least the German elections! Unless and in the meantime, under the increasingly depressing public agenda and the conditions in the economy, the political parties understand that only a broad parliamentary majority can guarantee a less risky pathway out of the crisis. And then perhaps the political staff facilitate such a development.

While the crawling 2nd round of the Evaluation of Greece’ s 3rd Bailout Programme seems to be approaching its crescendo, even by spreading “dissonant sounds” during the execution of the European anthem in Rome for the EU’ s 60th Anniversary – because of the Greeks insisting to include reference to the European acquis as it regards the social and employment agenda in the Declaration of the currently 27 Member States -, most of the engaged with this evaluation stakeholders seem to count on a smooth “fading out”. Having an agreement by mid April, in order to catch up with the corresponding Eurogroup’ s meetings, in order to agree on the transfer of the anticipated installment of some billions of Euros to the Greek accounts. So that the Greek government will mange to in-time meet its huge pending debt repayment liabilities of about € 7bn sometime in July.

Both the European institutions and the Greek government are much counting on the unexpected and significant surplus in the public accounts (& its cashiers?) of the year 2016, originated from a huge increase of income, real estate and value-added taxes, which have contributed a lot to this public sector’ s surplus. Without underestimating the equally significant contribution to this surplus from the upholding of the third party payments of the state to the private sector, which has again reached unprecedented heights. With this surplus in hand and even with only a part of the scheduled installment from the ESM (having done part of the reforms scheduled), both the Europeans and the Greek authorities seem to be happy and live with, until just after the German elections’ milestone. The Commission (& ESM) will be happy, without having to face again the fiercely summer negotiations of the Summer of 2015, the Germans will avoid a “white noise” problem during their election period and the Greek government will prolong its survival reaching the end of year 2017!

The New Year entered having the Greek economy – and the society – facing a cloudy landscape and an ambiguous set of conditionalities. We have already stressed that Greece will not manage to successfully get out of this “vicious circle” by only scrutinizing private financial returns through an exhaustive taxation framework, without proceeding with the reforms, especially those with the public administration and being, with decreasing urgency, the judiciary, the education, training and human capital and the labour market and, of course, the health sector! We strongly believe that all parties – starting with the European institutions – need to identify and raise awareness about these priorities. And not exhausting the discussion only about meeting the balancing of public finances (primary surplus etc.). It is becoming a surviving move as you can read hereby!

It seems that the Fund is not feeling at ease with the emerging scenario of conflict, considered to be the scapegoat and be blamed – again – for its “bad cop'” s behavior, always asking for more austerity.

Yet the IMF’ s version of the state-of-play sheds, once again, some light on the potential way-out. Which I have already tried to prescribe some “posts away”. The only way out implies that the Greek government will proceed asap with the reforms, especially with the public sector and the openness of the goods’ markets, and via a well-proven way, while closing this evaluation round some time in March, shows to the European lenders and especially the other European societies, that the Greeks deserve not only the short-term, but even the mid-term re-profiling of their public debt, to be agreed upon with this evaluation. That is how the primary surpluses to-be-agreed will go down to the level of around 2%, for the period till 2022, at least. The only rational way to move on.

This is how any Greek government needs to be guided towards the breakthrough, with strong “peer reviewing” by the European partners. Independently whether it would be the present or most probably another government, but with a multi-partisan parliamentary support. Otherwise, PM Tsipras will deploy the back-up plan, having already alerted everyone about, with the announcements for the distribution of some € 617m among low-paid pensioners. And the back-up plan, for this parliamentary majority to remain in power, asks for a referendum, so that the people will say “NO” to the updated MoU that the lenders are asking for. Sorry to repeat myself, but the deja-vu is almost ante portas. Yet, with a worse than the previous one development.

It is sometimes the intuition working or perhaps our worst fears that imply to keep record about such an insightful view. As the one presented in this commentary by Martin Wolf, in a year 2007 FT issue. Which I am still wondering why I had downloaded and kept in my archives! I would say enjoy it, if it would have not depicted such an awful evolution! Why America need some elements of Welfare State

In my previous post (http://www.learnovation.gr/?p=85), through my discussions with experts and policy makers engaged with the Adjustment Programme for Greece, I had tried to name according to my understanding the conditions and those concrete steps, which will lead the Greek economy and society to the next phase, the one of sustainable growth, after reaching the necessary public fiscal consolidation level. Though the latter still looks pretty much fragile, because of the means which is being achieved through, we have considered the following in order to boost growth. Continue reading »

More than 15 months ago, at the end of June 2015, I was sharing with colleagues some thoughts about those moments’ conjuncture, with the new Greek namely radical-left government and its poor relations to the other Eurozone member countries and the EU institutions. In a text entitled “Europe with Greece or Greece in Europe: a hard-worked perspective with no more than long-term and marginal but sustainable returns” (http://www.learnovation.gr/?p=58) I was then referring to the prevailing conditions as follows.

“… How come that any rational European policy maker, and those of the IMF, could have expected that the Greeks, famous for their much emotional collective behavior, could stand for such a long period of austerity and misery, in order to save money and invest to the benefit of their children and future generations? …” While the vast majority of the political class in the country, with few exceptions, “…had, already from the start of the public Finance Adjustment Programme, adopted the argumentation that nothing such as this ‘nightmare of crisis’ would have happened, unless some ‘bad’, tax-avoiding rich Greeks and foreigners, together with the German and other ‘arms dealing multinationals’, supported by the corrupted previous governments, had not brought Greece to the verge of the bankruptcy.” Whereas, “ … the austerity was not the solution to the problem (in-famous ‘wrong recipe’) … contrary to that, it was the Programme that caused the crisis!..”

Still, even at these “high noon” moments, trying to close with some constructive thinking, I had ended like the following.

“… Europeans need to (a) set the basics for the potential follow-up Adjustment Programme, and (b) include … a strong support and peer review scheme, with technical teams in Greece. In order to consistently and patiently work with the Greek public administration on the ownership of the measures and reforms …” With two conditions “…First, …high level European politicians need to state explicitly …, making PM Tsipras and the rest of government understand that any political handling will have to be settled on the basis of a feasible technical (financial programme) agreement… (remember the “Varoufakis phenomenon!”). And “ … second, that whichever support programme, …, will have to implement the pending markets’ and the public sector’ s reforms, … which should not any more be considered an austerity policy framework, but a policy reforming one…”

That was back then, whereas it is more than evident, from what has been taking place since last summer, that the two afore-mentioned “conditions” had never been considered as fundamentals for the brokered deal. Well, how could they be?

That is why, (1) the already “closed” first evaluation of the current Programme has marginally succeeded in kicking off any of the critical reforms – as spelt out in the MoU -, apart from those with the privatizations, in fact only the ones scheduled already since 2014(!); (2) not any serious reform has been deployed not even “politically validated” before that, in any social policy sector, in public administration, the judiciary, health, education and training; (3) similar conditions prevail with the labor market and the opening of product and service markets, including the closed-shop professions (this is being in progress in the last 4 years!); (4) “foot dragging” is also the moto with all other privatizations; thus, (5) in order to make the ends meet, and reach the targeted public finance figures (with the primary surplus etc.) and the social security and pensions’ figures, the Greek economy is experiencing an unprecedented increase of taxation, ensuring a serious increase of collected taxes – while more families find impossible to have a decent life.